Preparing to Buy a Home for the First Time

Providing Mindful Lending to Arizona, California, and Colorado

Providing mindful lending to Arizona, California and Colorado residents involves understanding everyone’s unique financial needs. Our approach focuses on creating personalized mortgages that align with each borrower’s unique financial situation. We begin the mortgage process by discussing with our clients their dreams, goals and plans, which allows us to find the perfect mortgage to help them achieve their goals. Working with dozens of lenders that offer hundreds of mortgage loans, allows us to find the right mortgage to fit their needs, whether they are buying a home, refinancing their existing mortgage or looking to invest in real estate.

We understand the housing market in the states that we are licensed in so that we can help guide our borrowers to make informed decisions when choosing to buy a home or refinance their existing mortgage. Our knowledge of local markets and mortgages allows us to help our clients utilize a mortgage as a tool to help them achieve their financial objectives. Transparency and clear communication are central to the service provided, ensuring our clients are informed at every step.

  • Flexible mortgage solutions cater to our clients’ diverse requirements, accommodating different financial situations, credit challenges and unique income which often can be obstacles for people wanting to achieve the American Dream of Homeownership. We aim to provide access to competitive rates and terms that fit individual needs. By focusing on building long-term relationships, the mortgage experience becomes more than just a transaction; it is about fostering financial growth and stability.

    Dedicated support is available throughout the process, from the initial consultation to the closing of a mortgage. This commitment to exceptional service helps build trust and satisfaction, making the lending journey a positive and successful experience for Arizona, California, and Colorado residents.

Credit Score and History

What kind of credit score and history do I need to buy a home?

First, credit is not forever, it is not a tattoo, it changes daily. We are here to help educate you on credit, credit scores and tricks to help you improve your credit. Even if you have bad credit, we want to work with you, now. Do not “assume” that you know about credit and credit scores and what to do to buy a home…We are here to help you learn about credit, money and budgeting so that one day you will achieve your goal of homeownership.

Being Aware of your credit and what is happening with your credit is important. These days we can access “free” credit reports in a lot of different places. There are only a few places that we suggest you “trust” when it comes to your free credit report.

  • Credit Karma: Credit Karma is owned by TransUnion, and it reports your TransUnion and Equifax credit report information. Credit Karma is who we suggest that you use to monitor your credit daily. Credit Karma also provides “credit hacks” which are great tips to help you improve your credit and learn about credit and credit reporting.

  • Experian: We suggest that everyone sign up for Experian Boost. It adds things that you pay monthly onto your Experian file which helps “boost” your credit. Experian Boost also allows you to see your Experian report.

What is the minimum credit score required to get a mortgage?

It depends!

We have loan programs that have minimum credit score requirements of 500!!!

Now, we prefer to help you understand your credit to get the highest credit score possible so that you can get the best mortgage, but we can get you a mortgage if you have a 500-credit score!

Down Payment and Closing Costs

Your down payment is your equity in your home. Most mortgages require a down payment to show your commitment to the purchase of a home. There are loan programs that require as little as 3% of the purchase pr’s down payment.

We do offer down assistance programs to help cover your down payment

Closing costs are fees charged by third parties to close a home's sale and obtain a mortgage. Some closing costs charged to a buyer when buying a home are:

Credit reports, appraisal, tax service fees, flood certification, settlement fees, title insurance, notary fees, endorsements, and recording fees.

Other home purchasing costs include homeowners insurance, property taxes, and homeowners’ association fees and dues. Your mortgage broker will review all of these with you during the prequalification and mortgage loan process.

What Payment Can You Afford?

A borrower’s Debt-to-Income ratio (DTI) is calculated using their monthly income in comparison to their estimated mortgage payment and other monthly financial obligations reported on their credit report.

Debt to income ratios do not include things like utilities, groceries, childcare, or medical bills.

Borrowers should consider their entire budget, including all bills and expenses and spending habits, to find what mortgage payment they can comfortably afford. Often people will need to give up some of their spending habits like Starbucks, Uber Eats or going out to save money to afford a mortgage payment.

NOTE: Once a borrower starts looking to purchase a home, they should not apply for credit, make big purchases, obtain new debt, or change their employment as these can impact their ability to obtain a mortgage.

Preapproval versus Prequalification

Many people use these terms interchangeably while others think one is better than the other. When working with Mindful Money you will not be out looking for a home without having submitted a full mortgage loan application and having it reviewed by our expert mortgage loan officers and submitted to underwriting.

Many would consider Mindful Money’s prequalification process as a pre-approval, but we do this with all clients before telling them they can buy a home. We believe that you cannot be prequalified without having a full underwriting review of all your entire loan application.

Other lenders think that a prequalification means that a loan officer asks a potential buyer a few qualifying questions which include what the person makes at their job, what they think their credit score is, what they owe for loans, and credit cards, what they have for a down payment. They plug this info into their processing software and estimate that a person does or does not qualify for a mortgage and then they give them a prequalification. This is not worth the paper that it is written on or printed on!!!

These other lenders think that preapproval occurs when someone is under contract and finally does a loan application and the lender pulls their credit, gets their supporting documents and then turns the file into an underwriter. The loan officer then waits for the underwriter to say if the person is preapproved or not. Mean while the buyer/borrower is out spending money on home inspections and appraisals thinking that they are getting a mortgage to buy their dream home. This is where many hearts are broken, and money is lost because the person does not qualify for a mortgage.

A Real Estate Agent will not show you homes without a prequalification and without speaking with your Mortgage Broker confirming that they have taken a loan application, seen credit and reviewed all supporting documents.

Working with Mindful Money is how you can ensure that when you have a Prequalification in hand that YOU will have keys in your hand once you have an accepted offer on your Dream HOME!

You have a prequalification, now what?

First, you will want to meet with a Real Estate Agent who specializes in working with buyers. A Real Estate Agent that works with buyers is called a Buyer’s Agent. Your Buyer’s Agent will meet with you and explain why you want to work with them and have you sign a Buyer Broker Agreement which outlines what they will do for you and how much they are paid for their services. After learning about your Buyer’s Agent and signing a Buyer Brokers Agreement your agent will talk with you about what is important to you about a home.

  • They will then set up an online search for you through the Multiple Listing Service in your area. This is often referred to as the MLS and it is the online database where Real Estate Listing Agents advertise the home for sale that they are representing for sale. The MLS is only available to Real Estate Agents and is the most accurate search engine for active homes listings for sale. Yes, there are other online searches like Zillow and Redfin but those are not the MLS and are not accurate like the MLS. Only a licensed Real Estate Agent has access to the MLS. You will want to work with a Buyer’s Agent to see all the active available homes for sale that meet your search criteria. As you search for homes you will want to pick out homes that you like and would like to see in person. Your agent will then call the seller’s Listing Agent on those homes and schedule a showing for you. Generally, your Buyer’s Agent will set up several showings on one day so that you can determine if any of the homes meet your requirements and if you would like to write up an offer to buy one.

Offer Accepted

Many things occur once the home seller accepts your offer to buy a home. Let’s cover what happens regarding obtaining your mortgage to buy that home.

Since you worked with Mindful Money for your prequalification this process will be much simpler than it would be if you had worked with another lender.

Your mortgage broker will review your mortgage loan application and documentation to determine if any information or documents need to be updated.

  • Usually, they will need your current pay stubs and bank statements.

  • They will also ask you to contact your insurance agent and obtain a quote for homeowners’ insurance on your new home.

  • Your mortgage broker will also ask you to provide them with a copy of the check or wire to the escrow company for your earnest money deposit. Once the earnest money check has cleared your bank account, we will ask you for your transaction history from the end of your last bank statement to the day the earnest money cleared your bank account.

*Reminder: do not make any large purchases, quit your job, close any accounts, or allow anyone to pull your credit. When in doubt, call your mortgage broker

Closing Day

  • Read all the documents carefully

  • Pay attention to when the first payment is due and where it needs to be sent

After Closing

Things To Consider

  • Home repairs and lawn maintenance are the buyer’s responsibility.

  • The monthly payment will change if the amount of taxes or insurance owed on the property changes or if you have an adjustable-rate mortgage.

    • After the first year, the city will reassess the home’s value, which could result in a property tax increase.

      • Discuss this with the broker/lender. 

  • If the borrower is unable to make a full payment, they can contact their lender to avoid foreclosure.

    • Potential options available include refinancing, loan modifications, repayment plans, and forbearance.

  • Loan servicing transfer

    • The borrower will be notified by their lender if the loan is sold/transferred to another lender.

      • Follow all instructions within the transfer letter.

    • Payments will not change if the loan is transferred to another lender.

FAQs

    • Seller: Current owner of home

    • Buyer: Person who has an accepted offer on the seller’s home

    • Listing Agent: Real Estate Professional who represents the home seller and looks out for their best interest

    • Buyer’s Agent: Real Estate Professional who represents the home buyer and is their advocate

    • Home Inspector: Licensed and trained professional hired by a buyer to inspect a home and property for any defects in a home that could be an issue of the home that you are buying.

    • Mortgage Broker: Your personal mortgage concierge.  Your Mortgage Broker complies your mortgage loan application and documentation then shops for the best mortgage loan to fit your needs.  They then are the intermediary between a borrower and the wholesale lender.  They submit your application to the lender and act on your behalf to work with the lender to get you a mortgage loan to buy a home.

    • Wholesale Lender: The wholesale mortgage lender underwrites your mortgage loan application to ensure that it meets the guidelines set by the insurer of the mortgage loan that you are applying for. Once the lender confirms that you meet lending guidelines they approve your loan, fund your loan and service your mortgage loan.

    • Escrow / Title Company: Depending on what state you are buying a home in the title and escrow company can be one in the same or different entities.  The escrow company is the neutral 3-rd party to collect all the documents from the seller, buyer, title insurer, real estate agents, homeowners’ association, and wholesale lender to close the sale of the home. The title company researches the title of the home to ensure that all liens on the home will be cleared at closing and that the only lien on the property after closing will be the mortgage that you are obtaining to buy the home.

    • Escrow Officer: Your Escrow Officer is the person who works for the escrow company who oversees your transaction to purchase the home. They will communicate with you about the items needed to insure the title of your home after you close on the home.  They will be the person who holds your earnest money deposit and closing funds in escrow until after you sign the loan documents, and the lender approves the closing.  Once the lender sends the wire to your Escrow Officer, they will record the deed removing the current owner from the title of the home and placing you as the owner, they will also record the deed of trust which shows that you have a mortgage on the home. They then will release the funds to the seller and all parties in the transaction who need to be paid for services in relation to the sale of the home.

    • Underwriter: The underwriter works for the wholesale lender, and they are the person that verifies all the information about you, your income, assets and credit to ensure they meet the guidelines for the mortgage that you are applying for to buy your home.  The underwriter also reviews the title report, appraisal and other documents in relation to the home to ensure that the home also meets lending guidelines.  The underwriter is the person who approves your mortgage loan application for the lender and makes the final decision to loan money to you to buy your new home.

    • Doc Drawer Funder

    • Notary

    • Closing Agent

  • There’s no one-size-fits-all approach to knowing if someone is ready to be a homeowner. When debating renting vs. buying, a person will need to consider their lifestyle and long-term goals. There are a few signs someone may be ready to purchase a home, including:

    • Feeling financially stable

    • Feeling ready to settle in a specific location

    • Desiring more freedom for home renovations

    • Wanting more space and privacy

    • Reviewing your purchase agreement to update your mortgage loan application to reflect the terms of your offer like, purchase price, earnest money amount, down payment, loan amount, closing date, seller concessions, and any other terms of your purchase contract.

    • Contact the escrow company to request their fees, and the needed documents for your loan such as: preliminary title report, tax certificate, estimated settlement statement, their errors and omissions insurance, wire instructions, licenses and homeowners’ association documents if applicable.

    • Shopping for the best rates and terms for you and your new home!

    • Complete the Uniform Residential Loan Application

      • The broker/lender will help the borrower fill this out. It includes the following:

        • Type and terms of the loan the borrower is applying form, property information, personal information, current and previous employment (most recent 2 years), income, assets and liabilities, declarations, details of the transaction, demographic

    • Documents to Submit

      • Documents the borrower will need to provide include but are not limited to: 

        • Income

          • Most recent pay stubs

          • Most recent two years of tax documents

            • W-2 statements 

            • 1099 statements 

            • Federal tax return

              • Needed for borrowers who are self-employed or using passive income (such as child support/alimony, Social Security SSA/SSDI, etc.) to qualify.

        • Assets

          • Most recent 60 to 90 days of:

            • Checking and savings account statements

            • Retirement account statements

            • Money market accounts

          • Gift funds

            • Must be accompanied by a gift letter

  • To prepare to buy a first home, the prospective buyer should:

    • Pay attention to their credit score using free online tools and try to improve the score where possible

    • Save money for a down payment

    • Save for additional home-buying costs (inspections, insurance, deposits, etc.)

    • Work with a loan officer to determine how much home they can afford

    • Receive pre-approved for a mortgage

    • Find a real estate agent

    • Start looking for homes!

  • A loan officer can help find providers who offer online credit/budget counseling, many of which may be free. Borrowers can get a list of HUD-Approved Housing Counseling Agencies in their area by calling 1-800-569-4287 or by going to HUD.gov, entering “counseling agencies” in the search bar, and sorting results by their city, state, or zip code.

  • While buying a home without a real estate agent is possible, they’re a great resource to have during the home-buying process. Real estate agents are trained to help; they’re experts on current market conditions, real estate procedures, and the closing process. They also have connections to lenders and other service professionals who can help make the process go more smoothly.

  • Buying a home is a significant decision, so take time to find a real estate agent who’s best for you. Ask for recommendations from family and friends, or look online for local real estate agents. If you’re already working with a loan officer, they may also have agents they partner with that they trust. Interview several agents and look online for reviews from other home buyers before making a choice.

  • A pre-approval gives a borrower an estimate of how much they can borrow based on several key factors:

    • Credit history

    • Credit score

    • Employment history

    • Income

    • Debt-to-income ratio

    • Available assets

    A pre-approval letter will include information about the loan the borrower could be approved for, including the interest rate, the monthly payment, and the number of years the mortgage will last. It gives them more confidence in knowing the payment they can afford and shows the seller they’re serious about purchasing. To get the best deal, talk with multiple lenders and compare their interest rates and loan options.

  • Many loan programs can be tailored to fit a borrower’s needs and financial resources, including programs that require as little as 3% down.

  • Typically, borrowers need to provide documentation that verifies their identity, employment, income, assets, and any financial obligations, which may include:

    • Unexpired form of identification (state-issued ID, passport, military ID, Green Card, U.S. visa)

    • 1-94 card, Employment Authorization Document card, etc.

    • Pay stubs for the last 2 months

    • W-2 forms for the previous 2 years

    • Bank statements for the previous 2 to 3 months

    • 1 to 2 years of federal tax returns

    • Purchase agreement/sale contract (if they’ve already chosen a new home)

    • Details regarding current debt, including car loans, student loans, and credit cards

Licensed Mortgage Broker in Arizona, California, and Colorado

Hear From our clients in their new home

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First-time buyers who wish to start the journey towards mindful lending today should contact our Mindful Money team for expert guidance and personalized solutions tailored to individual needs in California, Arizona, and Colorado.

All types of loans we provide:

  • A Qualified Mortgage is a category of loans with certain, more stable features that help make it more likely that you’ll be able to afford your loan.

    Conventional Mortgages, Conventional Rate, and Term Refinance, Conventional Cash Out Refinance, Conventional Down Payment Assistance Programs, Conventional First-Time Home Buyer Programs, Fixed Mortgages, ARMs Adjustable-Rate Mortgages, FHA Mortgages, FHA Down Payment Assistance Programs, FHA First Time Home Buyer Programs, FHA Streamline Refinance, FHA Cash Out, FHA 203K – Rehab Mortgage, FHA Reverse Mortgages, Non-FHA Reverse Mortgages, VA Purchase Mortgages, VA Jumbo Mortgages, VA Cash Out Mortgages, VAIRRL – VA Interest Rate Reduction Refinance Loan, Manufactured Home Mortgages - Conventional, FHA, VA, Construction Mortgages

  • Non-QM stands for Non-Qualified Mortgage. These loans are for borrowers who may not meet the requirements of standard loan programs. Non-QM loans typically have a special income qualification and are designed for people with unique income streams.

    Purchase, Cash Out, & Rate & Term Non-QM, 40 Year Term Mortgages. Interest Only Mortgages, Jumbo Mortgages, Alternative Income Qualifications for Self-Employed Borrowers, Fixed 2nd Mortgages, HELOC Home Equity Loan of Credit Mortgages, Bridge Loans, Fix & Flip, Foreign National Mortgages, ITIN Mortgages, Investor Loans, More than ten financed properties, DSCR: Rental income used to Qualify, Airbnb and VRBO Short term rentals